Question:
A. Describe the important economic characteristics of Standard & Poor's 500 index.
b. Suppose S&P 500 index with only three stocks. The firs stock price is $40, with 300 shares outstanding. The second and third stocks sell for $60 and $80 with shares outstanding of 200 and 100, respectively. Each stock originally sold 100 shares at $30. If the base index value is 100, what is the value of the index? What happens when the $80 stock has a 2-for-1 stock split?